Learned a new concept today: coal as capital.
Schumacher argues that we should treat coal and oil as capital instead of income. Because I’m not an economist, I had to ask help to figure out what exactly that meant.
With the assistance of Ed Lenert, my prof/boss I think I’ve got it down.
If you get $10 million out of a harvest of corn, the cost of reseeding, fertilizing and doing the process all over again will be returned to you the next harvest – a return on your invest for growing corn.
But with coal as a finite resource, there is no return. The cost of mining and essentially destroying the land cannot be repaired simply because it isn’t factored into the cost.
If we treated coal as the precious finite resource it is, we would have to take a conservationist attitude.
I mean, would you just throw a gold necklace away? We put a high value on it because it is rare and finite. Having the same attitude toward coal would mean reducing energy usage and investing in renewable energy.
And that’s the difference between income and capital!
